Under a provision in Governor Deval Patrick’s fiscal 2014 plan for the state, a "modern products" Massachusetts sales tax of 4.5% will be levied on the design and engineering services that create the digital world. Massachusetts is filled with software development companies — with verticals from mobile to healthcare to enterprise. It's a key innovation sector that drives the growth of our state economy and keeps our employment — which has consistently been better than that of the nation as a whole — at a healthy rate.

So, what will the consequences of this new tax be? For every $1 million in revenue, under the Governor's proposal, a software shop will pay an additional $45,000 — on top of the payroll, property, real estate, business and any other taxes it already pays. Consider this: For every $2 million in revenue, that's $90,000 in taxes, which could cover the salary of an entry-level software engineer including benefits. The 2011 Index of the Massachusetts Innovation Economy, indicates that software and computer services accounted for $31 billion of Massachusetts economic output. If, for the sake of argument, we consider just half of the economic output as taxable software design and development services, that would result in about $695 million in tax revenue, or roughly the equivalent of 7,750 entry-level software engineering jobs. Will this new proposed tax eliminate the creation of 7,750 high-quality jobs in Massachusetts? I'm not eager to find out. Now, to be fair, the Governor's budget estimates show a figure of just a quarter billion dollars in revenue to be realized from this tax, but the true consequences, like the law itself, remain unclear. The law is vague enough that the sales tax could cover all kinds of software, from mobile apps to even Web sites.

The age of information is upon us, and much has been made of the great improvements to communication, collaboration, and business process efficiency as we transform from an industrial- to a knowledge-based economy. However, despite all the rapid technological changes of the past 20 years, we are still at the very beginnings of the knowledge work era. At the dawn of the industrial age, in the late 1700s and early 1800s, society underwent a similar set of changes. The agrarian life was upended, as the industrial life took hold, and people flocked from the countryside to the booming cities looking for work in newly created factories. These people were faced with whole new ways of working, new expectations, new dangers, and the new tensions as working class and management sorted out the methods for engagement and production that would eventually take hold and slowly evolve over the next 200+ years. In many ways, we are at a similar inflection point in our societal and economic transformation. What this means, at the most basic level, is that we're still figuring out how to work together in an environment that is newly defined, and spans both the virtual and physical worlds. And while there have been many discussions about how best to relate to each other virtually, and manage the tactical aspects of technology — from e-mail to instant messaging to video conferencing to cloud software — there is less discussion about how we structure our agreements, how we collaborate in a larger, strategic sense.

Freelance Nation
For designers and engineers and other innovators, perhaps the first step on this path to the new virtual knowledge work, was exemplified by the birth of freelance nation, which was well-documented by author Daniel Pink in his groundbreaking 2002 book "Free Agent Nation: The Future of Working for Yourself". Knowledge work can be done anywhere and, freed from the confines of geography and the purview of one employer, we may work with anyone we please. And so, the permanent employee model has has been relegated to one possible working arrangement out of many. Now, there are new ways to engage, and knowledge workers are experimenting with, and discovering these — from the "The Hollywood Model" of pure project-based collaboration to other, more long-term methods of partnering. We are no longer beholden to the industrial age forms of working, so why should we be constrained by the business structures that have evolved to make that type of work happen? We shouldn't. But it will, no doubt, take time to get there.

The university system is critical to the Innovation Economy in Boston. Not only do schools supply the region with well-trained creative class workers in fields like engineering, science, design, and architecture; they also serve as R&D labs, generating new technology research; and as catalysts for the marketplace of ideas that fuels entrepreneurialism and a growing ecosystem of start-up companies. In addition, universities provide a place for that all important cross-pollination of ideas across industries and practices, which drives ongoing and sometimes unexpected innovation.

Nowhere is this more apparent than at events like "Tech, Drugs and Rock n' Roll" presented by Boston University's Office of Technology Development last week — a great example of the power of the university as catalyst. The TDRR event brought together academic scientists, industry representatives, investors, service providers, and students in a relaxed setting that showcased impressive technologies from the Fraunhofer Institute, and BU's Life Sciences, Physical Sciences, Engineering, and Photonics departments.

We're at the very beginnings of a significant evolution in the way we work — not just in from a technical perspective, although that's a significant driver — but in the culture and nature of work and organizational relationships. The way we work today is markedly different from the way our parents worked, and even more distant from the way their parents worked. The shift is so pronounced in part because knowledge work requires that we manipulate digital objects — be they words, videos, designs, figures, models, or code — rather than physical ones, and that these digital objects represent our production. However, for knowledge workers — designers, engineers, architects, scientists, writers, etc. — while the tools of the trade may have become digital decades ago, the process of working with others, the structure and the framework of engagement, is still catching up. And all the while, the technology continues to race forward.

While digital communication and production tools have made it possible that we no longer need be in the same physical location to collaborate, from a human interaction perspective, it still helps to meet face-to-face, read body language around the table, and share a meal. So, now we exist in a hybrid space where colleagues from across the world can meet up to kick off a project, and then continue working separately, only to meet again at critical moments in the process. Into this new digital world of possibilities, we step with the baggage of the industrial age, whether it's organizational structure, or contract language, or work culture. We're still finding our way and inventing new ways to work together to produce new things.